Fiat, Suzuki discuss partnership expansion

Automakers talk about new SUV for Fiat, diesel engines for Suzuki

TURIN - Fiat S.p.A. and Japan's Suzuki Motor Corp. are talking about expanding their cooperation, despite Fiat rival Volkswagen AG owning a 19.9 percent in the Japanese automaker, two people with direct knowledge of the matter told Automotive News Europe.

Fiat and Suzuki have industrial partnerships dating back 10 years. Suzuki builds the Sedici small SUV for Fiat in Hungary and produces Fiat diesel engines under license in India.

According to two people briefed on the matter, Suzuki Chairman Osamu Suzuki offered to build the next-generation Sedici for Fiat during a meeting with Fiat CEO Sergio Marchionne in Turin on May 25. Fiat Chairman and controlling shareholder John Elkann also briefly participated to the meeting.

Production of the current Sedici, launched in 2005, ends in 2013 and Fiat's product plan, which extends until 2014, does not include a replacement for the model, which is a rebadged version of the Suzuki SX4, Europe's top-selling small SUV.

Fiat is considering replacing the Sedici with a small SUV planned in 2013 by Chrysler's Jeep unit and code-named B-Jeep, but no decision has been made, a Fiat source said.

Fiat has a contract with Suzuki to buy 20,000 units a year of the Sedici. In 2007, Sedici sales peaked at 31,855 units, but since then have been steadily declining, down to 16,505 last year, according to data from JATO Dynamics. Suzuki SX4 sales peaked at 50,354 in 2008 but declined to 37,517 units last year.

India plans

In India, Suzuki builds Fiat's 1.3-liter diesel. Suzuki also bought rights to build in Japan Fiat's new 2.0-liter diesel engine, but has not started producing it. The SX4 built in Hungary uses 2.0-liter Fiat diesels.

According to the sources, Suzuki has asked Fiat for permission to double annual production in India of the 1.3-liter diesel to 400,000 units, but Fiat has proposed to build the additional engines for Suzuki in a heavily underutilized, 300,000-unit-a-year engine plant in Ranjangaon, India, which is part of Fiat's joint venture with Tata Motors Ltd.

During the May 25 meeting, the two companies also discussed the possibility of Fiat partsmaking subsidiary Magneti Marelli supplying Suzuki in India with an automated manual transmission system. Marelli currently supplies Suzuki with the engine management control unit for the 1.3-liter diesel.

No talks on Brazil

The two sources denied that Fiat and Suzuki discussed cooperating in Brazil, as reported in the Italian media. Fiat has been Brazil's No. 1 automaker for the last seven years based on combined passenger car and light commercial vehicle sales. Fiat controls about a quarter of the total vehicle market. Suzuki has no industrial and commercial presence in Brazil, where private importers sell just few thousand Suzukis a year.

Fiat and Suzuki said the May 25 meeting was simply the usual "courtesy visit" that the Suzuki chairman pays to Fiat when he flies to Europe to chair the annual meeting of Magyar Suzuki subsidiary in Esztergom, Hungary.